The South Korean stock market on Tuesday saw an end to the modest three-day winning streak in which it gathered more than 100 points or 7.5 percent on its way to a six-month closing high. The KOSPI is holding on to support at 1,400 points, although analysts warn that the market could fall through that level at the opening of trade on Wednesday.
The global forecast for the Asian markets is inconclusive, although some of the markets may experience a downside correction after a series of lengthy winning streaks. Technology shares may fall under pressure, as could the auto shares after weak corporate news. The European markets were mostly lower, as were the U.S. markets, and the Asian bourses are forecast to follow that lead.
The KOSPI finished modestly lower on Tuesday, thanks to selling pressure among the financials, industrials and technology shares.
For the day, the index was down 12.65 points or 0.8 percent to close at 1,403.51 after trading between 1,395.91 and 1,411.21. Volume was 754.8 million shares worth 6.54 trillion won, with decliners topping gainers 503 to 309.
Among the decliners, Daewoo Shipbuilding tumbled 4.11 percent, while Hyundai Heavy Industries declined 1.61 percent, Samsung Heavy Industries fell 2.52 percent, Korean Air Line fell 2.60 percent, SK was down 1.21 percent, steel maker POSCO lost 1.62 percent, SK Telecom shed 0.54 percent, Woori Finance fell 4.74 percent, Korea Exchange Bank tumbled 5.56 percent, KB Financial was down 4.68 percent, Ssangyong Motor fell 1.48 percent, LG Display LCD was down 2.35 percent and Samsung Electronics eased 0.36 percent.
Bucking the trend, Kia Motors moved up 1.65 percent, while Hyundai Motor rose 0.93 percent, LG Electronics gained 0.49 percent and Hynix Semiconductor added 2.46 percent.
The lead from Wall Street is mixed as stocks showed some volatility over the course of the trading day on Tuesday, with the major averages having difficulty sustaining any significant moves before ending the session mixed. The choppy trading came as traders expressed some uncertainty about the outlook for the markets.
While stocks initially moved higher following the weakness that was seen in the previous session, buying interest waned not long after the open. The major averages subsequently pulled back off their highs for the session and into negative territory.
The pullback by the markets was partly due to concerns about the outlook for General Motors (GM), which moved sharply lower on the day to reach its lowest levels since the depression. The loss by GM came as traders worried that the company is on the verge of filing for bankruptcy after several company executives revealed that they sold their GM stock and liquidated their remaining direct holdings in the company.
Shares of rival Ford (F) also came under pressure after the automaker announced a public offering of 300 million shares of its common stock. Ford closed down 17.6 percent, pulling back further off the ten-month closing high it set last week. Selling pressure remained somewhat subdued, however, and stocks showed a notable move back to the upside in late day trading. The major averages all moved well off their worst levels of the day, with the Dow climbing firmly into positive territory.
In economic news, the Commerce Department released a report earlier in the day showing that the U.S. trade deficit for March came in wider than in the previous month, with the value of exports falling by more than the value of imports. While the report showed that the trade deficit widened to $27.6 billion in March from a revised $26.1 billion in February, economists had expected the deficit to widen to $29.0 billion.
Separately, a report from the Trustees for Medicare and Social Security showed that the funds that the programs rely on are being depleted at a faster rate than originally forecast. At the updated rate, Medicare's expenses will exceed taxpayer revenue in 2017, two years ahead of the earlier estimate, while Social Security's trust fund will be wiped out in 2037, four years ahead of the earlier estimate.
The major averages eventually ended the session mixed, with the Dow posting a moderate gain. While the Dow closed up 50.34 points or 0.6 percent at 8,469.11, the NASDAQ fell 15.32 points or 0.9 percent to 1,715.92 and the S&P 500 closed down 0.89 points or 0.1 percent at 908.35.
In economic news, South Korea will on Wednesday provide the seasonally adjusted unemployment rate for the month of April. Analysts are expecting the rate to climb to 4 percent, up from 3.7 percent in March.
Also, the Bank of Korea on Tuesday voted to keep interest rates on hold, maintaining the record low of 2.00 percent - in line with expectations. Before also holding rates at the March 12 and April 9 meetings, the bank had trimmed rates by 50 basis points to 2 percent on February 12, marking the sixth rate cut in the previous four months.
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